Trust as Beneficairy on IRA
In reading thru many past posts in regards to an IRA having the owners Trust as a beneficiary I have seen posts advising the Trust have the proper language to allow the beneficiaries (assuming the Trust is Qualified) to elect to stretch their portion. I manage numerous IRA’s with the owner’s Trust either primary or contingent beneficiary and the estate planning attorney I work with has placed the following language within the Trustee Powers section of Trust “In the event that I own any qualified accounts (401k, IRA, etc.) upon my death, and further in the event that I have designated this Trust as the death beneficiary of said qualified account[s] then in that event I hereby vest in my trustee the authority to elect to distribute said benefits or “stretch” (life expectancy payout method) the minimum required distribution of any said qualified account[s]”. I have had numerous IRA clients pass with their Trust as sole beneficiary and the Custodian (LPL Financial or American Funds) claim paperwork allows the Bene IRA to be opened under the name of the decedent, for the benefit of beneficiary. Neither require any language in Trust to facilitate this request, they only need copy of Trust to verify current trustee and named beneficiaries. Thou each bene will have their own Bene IRA and not titled under the Trust they still must use oldest bene’s DOB for RMD purposes. I’m confused about what language I’m missing such as allowing sub trusts to be created. Maybe this will allow each bene to use their own DOB for RMD purposes but I have seen many PL rulings conflict if this is indeed possible. Any suggestions on language or a clarification on my thought process would be appreciated. I’m just wondering if any language should be in Trust regarding ability to stretch since all Custodian’s I have worked with simply need to know if Trust is Qualified and rely on Trustee to provide beneficiary information.
Permalink Submitted by Bruce Steiner on Wed, 2016-09-07 19:01
Permalink Submitted by MIKE KRUCHTEN on Wed, 2016-09-07 21:16
If I own my Roth IRA and elect to name my Trust as sole beneficiary is my meaning of “owner’s trust”.
Permalink Submitted by Bruce Steiner on Wed, 2016-09-07 22:29
What is “my trust”? You’ll be dead when your beneficiary designation takes effective. You can’t be a beneficiary of a trust after your death. You could name a marital trust for your spouse, a credit shelter trust, trusts for your children, etc., as beneficiaries. But it wouldn’t make sense for you to name a trust for your own benefit as the beneficiary of your IRA.
Permalink Submitted by MIKE KRUCHTEN on Thu, 2016-09-08 12:00
My revocable living trust is beneficiary. Of course when I die the listed bene’s within document will received their specified %. But since my experience with custodians has allowed the trust to be looked thru the named bene’s within trust document now own the Bene IRA vs. Trust. This is my rationale for inquiring about specific language within Trust that seems not to be required for look thru to occur. Maybe certain custodians require???
Permalink Submitted by Bruce Steiner on Fri, 2016-09-09 18:17
Permalink Submitted by David Mertz on Fri, 2016-09-09 19:16
Is there ever any benefit to listing a revocable living trust as the beneficiary of an IRA?
Permalink Submitted by Bruce Steiner on Fri, 2016-09-09 21:52